Heavy Duty Pty Ltd (“Heavy Duty”) is an Australian company involved in the production of power tools. It enters into a contract (the “Supply Contract”) with
The post The “Supply Contract” with Road Diggers Pte Ltd first appeared on COMPLIANT PAPERS.
Heavy Duty Pty Ltd (“Heavy Duty”) is an Australian company involved in the production of power tools. It enters into a contract (the “Supply Contract”) with Road Diggers Pte Ltd (“Road Diggers”), a company incorporated in Singapore which sells tools to the construction industry in Singapore and Malaysia. The Supply Contract is governed by the law of England and Wales and contains an arbitration agreement, as follows:
“All disputes arising under this Supply Contract shall be resolved by arbitration in accordance with the ACICA Rules of Arbitration (2021).”
The Supply Contract’s substantive terms are that Heavy Duty will supply 500 jackhammers to Road Diggers, and Road Diggers will pay AUD 1,000,000 (in two instalments). The jackhammers will be used by Road Diggers in the construction of a new freeway from the south of Singapore Island to the straits of Johore in the north (“the Freeway Project”).
Before entering into the Supply Contract, Heavy Duty had provided Road Diggers with a brochure which purported to set out a record of its past experience in supporting major infrastructure projects. This brochure contained the false claim that it had provided jackhammers that had been used by the Thai Government in the construction of the major
road between Bangkok and Phuket. Because this was similar to the Freeway Project, Road Diggers had confidence that Heavy Duty was the right commercial partner to choose. The Supply Contract was therefore signed, and Road Diggers made an initial payment of AUD 500,000 to Heavy Duty.
After the jackhammers have been delivered, Road Diggers begins using them but the jackhammers malfunction. Specifically, the sharp end of the jackhammer which is used to break open the rocky ground surface fails, with the result that the 500 jackhammers purchased under the Supply Contract are useless. Road Diggers complains to Heavy Duty that the jackhammers were not designed to the right specification; it withholds payment of the remaining AUD 500,000 and demands that the initial payment be refunded. For its part, Heavy Duty rejects Road Diggers’ claim, and demands payment of the outstanding AUD 500,000.
Meanwhile, Road Diggers learns from a business partner in Thailand that a different company (not Heavy Duty) had provided the jackhammers for the road construction project between Bangkok and Phuket, and that Heavy Duty’s claim on its brochure was therefore false.
Road Diggers institutes proceedings in the Supreme Court of New South Wales, seeking reimbursement of its AUD 500,000, plus compensatory damages of AUD 1,000,000 to cover costs caused by the delay to the Freeway Project, as well as unspecified punitive damages. It argues that the Supply Contract is void ab initio. In response, Heavy Duty argues that the Supreme Court lacks jurisdiction, that the dispute should be referred to international arbitration, and that punitive damages cannot be awarded.
Question 1.A: How should the Supreme Court of New South Wales decide whether it should exercise jurisdiction over the dispute or whether the dispute should be referred to international arbitration?
Assume that the Supreme Court of New South Wales refers the dispute to international arbitration under the ACICA Rules. Heavy Duty is represented by the Sydney law firm “Smith and Chan LLP”, and appoints a Melbourne-based barrister, Maria Koukoulas QC, as its party-appointed arbitrator. Road Diggers is represented by the Singaporean law firm “Raffles & Lee LLC”, and appoints Jonathan Wang SC, a Singapore lawyer in independent practice, as its party-appointed arbitrator. Professor Gabrielle Kwan, a professor at the University of Hong Kong, is appointed as the presiding arbitrator.
Ten months after the constitution of the Tribunal, Road Diggers learns from informal sources that Maria Koukoulas QC is routinely appointed as arbitrator by Smith & Chan LLP. After making further discreet inquiries (from sources which are not in the public domain), it emerges that Ms Koukoulas has accepted six arbitral appointments from Smith & Chan LLP in the past five years. Internet searches also reveal that Ms Koukoulas is listed as a “friend” on the Facebook page of Barry Smith, the lawyer at Smith & Chan LLP who is acting for Heavy Duty in the arbitration, and that they are connected on “LinkedIn”.
And a perusal of Barry Smith’s (public) Instagram account suggests that he and Ms Koukoulas regularly see each other in a social setting. Road Diggers is concerned about these revelations.
At the same time, Heavy Duty discovers that Jonathan Wang SC had, some five years earlier, authored an article on the availability of punitive damages, expressing a view that “punitive damages are always available in international commercial arbitration where there is unacceptable conduct by a commercial party, irrespective of the applicable law.” This makes Heavy Duty concerned about Mr Wang’s views.
In addition, Road Diggers is anxious that information about the dispute be kept confidential.
Question 1.B: What can Road Diggers and Heavy Duty do about their concerns regarding Ms Koukoulas QC and Mr Wang SC? What procedure (if any) should be followed, and which body (if any) would make the decision? And what should Road Diggers do (if anything) to maintain confidentiality related to the arbitration?
The post The “Supply Contract” with Road Diggers Pte Ltd first appeared on COMPLIANT PAPERS.
